MOFA 1963 Section 11 | Competent Authority Can Enforce Conditional Deemed Conveyance but Lacks Power to Review or Terminate : Bombay HC

The Bombay High Court has clarified the scope of the Competent Authority's powers under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA 1963). While the Competent Authority can enforce a conditional deemed conveyance order, it cannot review or terminate the original order for non-compliance with the condition. This judgment underscores the principle that a party cannot approbate and reprobate - accept benefits under an order while denying its obligations.

Background & Facts

The Dispute

The dispute revolves around a property development agreement dated 1st May 1985 involving Balgauri Chimanlal Shah (the original owner) and M/s Ajit Chimanlal Shah and others (the developer). The larger premises, bearing CTS No. 1069 and admeasuring 2441.10 sq mtrs, was developed into two distinct portions:

• Pran Ashish Building-A: A ground-plus-seven-storied structure on 1833.31 sq mtrs (the society premises), sold to various flat purchasers.
• Pran Ashish Building-B: A stilt-plus-two-storied structure on 617.22 sq mtrs (the smaller premises), exclusively for the use of four tenants of the original owner - Ajit, Satish, Mahesh, and Himanshu Chimanlal Shah (predecessors-in-title of Respondent Nos. 2 to 8).

The Development Agreement stipulated that the society of flat purchasers in Building-A would execute a perpetual lease at a nominal rent of Rs. 1/- per annum in favour of the four tenants for the smaller premises and Building-B. Additionally, the tenants and their families were granted exclusive rights to a well on the southern side of the boundary wall.

Key Facts

• 1st May 1985: Development Agreement executed, granting exclusive rights to the four tenants over the smaller premises and Building-B.
• 3rd March 2000: Flat purchasers of Pran Ashish Building-A formed the Petitioner-society under the Maharashtra Cooperative Societies Act, 1960.
• 2014: Petitioner filed Application No. 166 of 2014 for a Certificate of Unilateral Deemed Conveyance (UDC) before the Competent Authority under Section 5A of MOFA 1963.
• 19th May 2015: Competent Authority granted UDC in favour of the Petitioner, subject to the condition of executing a perpetual lease in favour of Respondent Nos. 2 to 8 for the smaller premises.
• 12th April 2016: Deemed Conveyance executed in favour of the Petitioner-society.
• 2016-2024: Petitioner and Respondent Nos. 2 to 8 engaged in disputes over the terms of the lease. Respondent Nos. 2 to 8 sought unrestricted development rights over Building-B, which the Petitioner opposed, citing the context of the Development Agreement (restricting Building-B to two stories to preserve the sea view for Building-A occupants).
• 2024: Petitioner terminated the tenancy of Respondent Nos. 2 to 8 and filed T.E. Suit No. 62 of 2024 for their ejectment.
• Post-2015: Respondent No. 2 filed an application before the Competent Authority seeking execution of a unilateral deemed lease deed for the smaller premises.
• 18th August 2025: Competent Authority passed the impugned order, directing the Petitioner to execute and register the lease deed in favour of Respondent Nos. 2 to 8. The order further stipulated that failure to comply would result in the determination of the UDC order dated 19th May 2015 and all consequential actions.

Procedural History

• 2014: Petitioner filed Application No. 166 of 2014 for UDC.
• 19th May 2015: Competent Authority granted UDC subject to the condition of executing a perpetual lease.
• 12th April 2016: Deemed Conveyance executed in favour of the Petitioner.
• 2016-2024: Disputes over lease terms; Petitioner terminated tenancy and filed ejectment suit.
• Post-2015: Respondent No. 2 filed application for execution of unilateral deemed lease deed.
• 18th August 2025: Competent Authority passed impugned order directing execution of lease deed, failing which the UDC order would stand determined.
• 2025: Petitioner filed Writ Petition (L) No. 32903 of 2025 before the Bombay High Court.

Relief Sought

The Petitioner sought:

• Quashing of the impugned order dated 18th August 2025 to the extent it directed the determination of the UDC order dated 19th May 2015 for non-compliance.
• A declaration that the Competent Authority lacked jurisdiction to review or terminate the UDC order.
• Directions to the Competent Authority to enforce the lease deed without jeopardising the UDC order.

The Legal Issue

The central question was whether the Competent Authority under Section 11(4) of MOFA 1963 could:

1. Direct the execution of a perpetual lease deed as a condition of the deemed conveyance order.
2. Terminate the deemed conveyance order and all consequential actions for non-compliance with the condition.

Arguments Presented

For the Petitioner

• The impugned order suffered from jurisdictional error as the Competent Authority became functus officio after passing the final order on 19th May 2015. The Authority lacked power to review or terminate the UDC order.
• The Competent Authority's powers under Section 11(4) of MOFA 1963 are limited to issuing a Certificate of Unilateral Deemed Conveyance and cannot extend to adjudicating rights like a Civil Court.
• The Petitioner was willing to execute the lease deed but opposed the inclusion of a clause permitting unrestricted development of Building-B, which would block the sea view of Building-A occupants. This dispute should be resolved by a Civil Court, not the Competent Authority.
• The default stipulation in the impugned order - terminating the UDC order for non-compliance - was ultra vires the Competent Authority's powers.

For the Respondents

Respondent No. 2

• The Petitioner, having obtained the UDC order and deemed conveyance subject to the condition of executing the lease deed, cannot approbate and reprobate - accept benefits while denying obligations.
• The Development Agreement and the UDC order clearly mandated the execution of the lease deed. The Petitioner's conduct - terminating the lease and filing an ejectment suit - was mala fide.
• The impugned order was not a review but an enforcement order, ensuring compliance with the UDC order. The Competent Authority did not adjudicate rights afresh but merely enforced the existing obligation.
• The clauses of the draft Lease Deed (Exhibit 'G') were in consonance with the Development Agreement and did not exceed the Petitioner's obligations.

Respondent Nos. 3 to 8

• The impugned order promoted justice and should not be interfered with, as it aligned with the contractual obligations and the UDC order.
• Interference would result in miscarriage of justice, given the Petitioner's undisputed obligation to execute the lease deed.

The Court's Analysis

The Court examined the nature of the Competent Authority's powers under MOFA 1963 and the principle of approbate and reprobate.

Scope of Competent Authority's Powers

The Court relied on its decision in ACME Enterprises and Anr v. Deputy Registrar, Cooperative Societies & Ors to summarise the Competent Authority's remit under Section 11(4) of MOFA 1963:

"30. From the above statutory provisions and enunciation, the position which emerges can be summarized as under. The authority to grant deemed conveyance is conditioned and controlled by the primary obligation of the promoter to convey to the organization of flat purchasers right, title and interest in the land and buildings, in accordance with the agreement executed under Section 4. Competent authority cannot convey more than what the promoter had agreed to convey under the agreement executed under Section 4. What competent authority is thus required to consider is, the extent of the obligation incurred by the promoter, whether the obligation to execute the conveyance became enforceable and whether the promoter committed default in, or otherwise disabled himself from, executing the conveyance. 31. The enquiry is thus of limited nature. The competent authority cannot delve into the aspects of title. Nor the finding of the competent authority precludes a party from agitating the grievance as to the entitlement of the organization of purchasers to have the conveyance, before the Civil Court. The remit of enquiry by the competent authority is, thus, whether the conditions stipulated for enforcement of the obligation to execute the conveyance have been satisfied and, if yes, order an unilateral deemed conveyance."

The Court emphasised that the Competent Authority's role is to enforce the promoter's obligation to convey their right, title, and interest in the property to the society of flat purchasers. The Authority cannot adjudicate disputes like a Civil Court or convey rights beyond what the promoter agreed to under the Development Agreement.

Principle of Approbate and Reprobate

The Court invoked the Supreme Court's judgments in Rajasthan State Industrial Development And Investment Corporation v. Diamond & Gem Development Corporation Limited and Union of India v. N. Murugesan to elucidate the principle:

"I. Approbate and reprobate 15. A party cannot be permitted to 'blow hot-blow cold', 'fast and loose' or 'approbate and reprobate'. Where one knowingly accepts the benefits of a contract, or conveyance, or of an order, he is estopped from denying the validity of, or the binding effect of such contract, or conveyance, or order upon himself. This rule is applied to ensure equity, however, it must not be applied in such a manner so as to violate the principles of, what is right and of good conscience."

The Court held that the Petitioner, having accepted the benefits of the UDC order and deemed conveyance, could not resile from its obligation to execute the perpetual lease deed in favour of Respondent Nos. 2 to 8. The UDC order was expressly made subject to this condition, and the Petitioner's attempt to avoid it was contrary to the principle of approbate and reprobate.

Review vs. Enforcement

The Court distinguished between substantive review and procedural review, relying on the Supreme Court's judgments in Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji, Naresh Kumar v. Govt. (NCT of Delhi), Grindlays Bank Ltd. v. Central Government Industrial Tribunal, and Kapra Mazdoor Ekta Union v. Management of Birla Cotton and Spinning Mills:

"19. Applying these principles it is apparent that where a Court or quasi judicial authority having jurisdiction to adjudicate on merit proceeds to do so, its judgment or order can be reviewed on merit only if the Court or the quasi judicial authority is vested with power of review by express provision or by necessary implication. The procedural review belongs to a different category. In such a review, the Court or quasi judicial authority having jurisdiction to adjudicate proceeds to do so, but in doing so commits a procedural illegality which goes to the root of the matter and invalidates the proceeding itself, and consequently the order passed therein."

The Court held that the Competent Authority under MOFA 1963 has no power to review its own orders. While it can correct clerical errors, it cannot substantively review or modify an earlier order under the guise of enforcement. The impugned order, to the extent it directed the execution of the lease deed, was not a review but an enforcement of the UDC order's condition. However, the default stipulation - terminating the UDC order for non-compliance - amounted to a substantive review, which was beyond the Competent Authority's powers.

Context of the Development Agreement

The Court analysed the Development Agreement's covenant (Clause 6), which granted the four tenants:

1. A perpetual lease of the smaller premises at Rs. 1/- per annum.
2. Ownership of Building-B.
3. Exclusive right to use the well on the southern side of the boundary wall.

The UDC order dated 19th May 2015 incorporated this covenant as a condition. The impugned order directed the Petitioner to execute the lease deed in accordance with paragraphs F(i) to (iii) of Exhibit 'G', which mirrored the Development Agreement's terms. The Court held that these clauses did not exceed the Petitioner's obligations under the Development Agreement.

Petitioner's Apprehensions

The Petitioner's primary concern was that Respondent Nos. 2 to 8 would redevelop Building-B into a high-rise, blocking the sea view of Building-A occupants. The Court acknowledged that the Development Agreement restricted Building-B to two stories, but noted that no explicit covenant prohibited redevelopment. The Court held that the Petitioner's apprehensions, while understandable, could not justify non-compliance with the lease deed obligation. If the Petitioner sought to restrain redevelopment, it should have initiated appropriate proceedings in a Civil Court rather than resiling from its contractual obligations.

The Verdict

The Court partly allowed the Petition and modified the impugned order as follows:

1. The direction to execute and register the Lease Deed in favour of Respondent Nos. 2 to 8 in accordance with the Development Agreement and Exhibit 'G' was affirmed.
2. The default stipulation - terminating the UDC order dated 19th May 2015 and all consequential actions for non-compliance - was quashed and set aside.
3. The Petitioner was granted 30 days to execute the lease deed.
4. In the event of default, the Competent Authority was directed to issue a Certificate within two weeks entitling Respondent Nos. 2 to 8 to a unilateral deemed lease deed under Section 11 of MOFA 1963.

What This Means For Similar Cases

Competent Authority's Powers Are Limited to Enforcement

• The Competent Authority under MOFA 1963 can enforce conditions attached to a deemed conveyance order, such as the execution of a lease deed, but cannot review or terminate the order for non-compliance.
• Practitioners should argue that any default stipulation in an order that terminates or reviews an earlier order is ultra vires the Competent Authority's powers.
• If a party fails to comply with a condition, the Competent Authority can only facilitate unilateral execution (e.g., deemed lease deed) rather than nullifying the original order.

Principle of Approbate and Reprobate Applies to Conditional Orders

• A party that accepts benefits under an order cannot deny its obligations, even if the condition was not explicitly litigated at the time of the order.
• Societies or organisations obtaining deemed conveyance must scrutinise conditions attached to the order and comply with them to avoid disputes.
• If a party believes a condition is unfair or unenforceable, it should challenge the order immediately rather than accepting benefits and later resiling.

Disputes Over Contractual Interpretation Belong in Civil Courts

• The Competent Authority cannot adjudicate disputes over contractual interpretation (e.g., whether redevelopment is permitted). Such disputes must be resolved in Civil Courts.
• Parties should initiate separate proceedings for declaratory or injunctive relief if they seek to restrain actions (e.g., redevelopment) that may jeopardise their rights.
• The Competent Authority's role is limited to enforcing the promoter's obligations as agreed in the Development Agreement and Agreements for Sale.